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Reimbursement, demystified.

Reimbursement, demystified. . Charles William Bowkley, III MD 2007-8 James Moorefield Fellow, ACR Brown University – Warren Alpert Medical School. Patient Care. Radiologist. It’s really not that bad…. I promise. Introduction. CMS defines rate at which you are paid Very complicated . . .

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Reimbursement, demystified.

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  1. Reimbursement, demystified. Charles William Bowkley, III MD 2007-8 James Moorefield Fellow, ACR Brown University – Warren Alpert Medical School

  2. Patient Care

  3. Radiologist

  4. It’s really not that bad… I promise

  5. Introduction CMS defines rate at which you are paid Very complicated . . . You negotiate with 3rd PP What you get paid for (Procedure, E/M) How much you get paid A complex series of events determines the final outcome…

  6. Let’s address the basics…

  7. Medicare Part A – Hospital insurance • Inpt, SNF, Home Health, Hospice • Payroll taxes (FICA), Self Employed tax, RRA Part B – Medical insurance (Physician Fees) • Otpt Hospital / Physician Office, ASC, “Health prac.”, Lab/Dx services, etc. • Enrollee pymt, Fed. Revenues, Interest on B fund Part C – Medicare Advantage (MA) • Entitled to A, enrolled in B, reside in area of MA • Capitated “HMO/PPO” insurance for qualified Part D – Prescription Drug Plan

  8. Medicaid Federal financing for low income • Stringent requirements • May require co-pay • $$ paid to state health care provider, not patient

  9. Let’s walk through a simple patient encounter…

  10. 46 yo male with CC of Dyspnea HPI: 36 ppd with new onset of SOB, cough, and hemoptysis. PMH: None PSH: Appy, CCY Meds: MVI ALL: NKDA In-office CXR “nl”, CBC nl A/P: 46 yo smoker w/ hemoptysis, cough, and dyspnea. ? PNA ? CA - CT Chest I+

  11. Follow the paper trail . . .

  12. ICD-9 International Classification of Diseases, 9thed BBA 1997 physician ordering test MUST have signs, symptoms, and possibly diagnosis 786 (Cannot specify diagnosis) Symptoms involving respiratory system and other chest symptoms 786.2 Cough 786.3 Hemoptysis

  13. CPT 99203 Detailed history, office/outpt visit Primary care physician billing 71260 CT Chest I+ Radiologist billing

  14. Gray Shield - RI C.A. 71260

  15. CPT Current Procedural Terminology Codes and modifiers used to report services performed by healthcare providers Chosen as national standard code set Maintained by AMA CPT Editorial Panel http://www.ama-assn.org/ama/pub/category/3882.html

  16. CPT Category I Widespread use. Peer reviewed literature. Advisor support. Referred to AMA-RUC for valuation* Category II Optional, Performance measurement Decreased need to manually audit charts None created to date No payment Category III Limited dissemination Literature suggests future growth and utility. Primarily for tracking new procedures. NOT referred to AMA-RUC for valuation. • Carrier priced if covered. http://www.ama-assn.org/ama/pub/category/3882.html

  17. CPT Editorial Panel Chair: William T. Thorwarth Jr., M.D., (Former president of the ACR and former chair of the ACR Economics Commission) 18 Members 11 nominations by AMA 2 Vice-Chairmen and representative of Health Care Professionals Advisory Committee (HCPAC) 1 Blue Cross Blue Shield Association 1 Health Insurance Association of America 1 CMS 1 American Hospital Association 1 Performance Measures http://www.ama-assn.org/ama/pub/category/3882.html

  18. CPT Editorial Panel RUC Panel Advisory Committee Advisory Committee Code Application Staff Review Panel has already addressed the issue New Issue or Significant New Information Received Specialty Advisors Advisors Say Give Consideration Or 2 Specialty Advisors Disagree on Code Assignment or Nomenclature Advisor(s) Agree No New Code or Revision Needed Staff Letter to Requestor Informing Him/Her of Correct Coding Interpretation or Action Taken by the Panel Editorial Panel Table for Further Study Reject Proposal Change Add New Code/Delete Existing Code/or Revise Current Terminology

  19. RUC 29 members 23 appointed by special societies Chair American Medical Association Representative CPT Editorial Panel Representative American Osteopathic Association Representative Health Care Professionals Advisory Committee Representative Practice Expense Review Committee Representative

  20. RUC Cycle Coordinated with CPT Editorial Panel schedule Required to Survey at least 30 practicing physicians **(Essential)** Recommendations presented to RUC RUC may adopt or modify before submitting to CMS RUC recommendations forwarded to CMS in May CMS meets with Carrier Medical Directors (MAC) to review recommendations Medicare Physician Fee Schedule (includes CMS’s review of RUC Recommendations) published late Fall. Valued codes from May submission reflected January 1 following year.

  21. CPT Editorial Panel RUC Panel Advisory Committee Advisory Committee Specialty Society Advisors Review New and Revised CPT Codes CPT Editorial Panel Adopts Coding Changes Comment on Other Societies’ Proposals Survey Physicians Recommended Values Codes Do Not Require New Values No Comment RVS Update Committee Specialty Society RVS Committee CMS Medicare Payment Schedule

  22. What is relative value ?

  23. RBRVS RBRVS: resource based relative value scale • Pressure to change Part B expenditure Phased in January 1, 1996 “Customary, Prevailing, Reasonable” • Specialty specific • C: Median of individual charges for a specified time • P: 90th %ile of all peers in a defined area • R: Lowest of the Actual, Customary, Prevailing fee

  24. RVS1 California 1956 • Based on median charges reported by C. BS Harvard RBRVS, third iteration 1985 • W. C. Hsiao, MD & P. Braum, MD • Phase I • 18 medical specialties • Phase II • 15 additional specialties • Phase III / IV • Include remaining services coded by CPT

  25. RVS2 Include 3 main variables • Relative Physician Work (52%) • Practice Expenses (44%) • Professional Liability Insurance Costs (4%) Modifiers 1. Adjust for geographic locale 2. Different specialty, same service = same payment 3. “Budget Neutral” conversion factor (CF) (Would not change Medicare spending -/+) 4. Include process for annual update in CF 5. Limits on Balance billing 6. Medicare Volume Performance Standard (SGR)

  26. ICD-9 CPTPC/TC 786.2 71260 55.36/ 263.79 786.3 Black Box What happens in here?

  27. PAYMENT (Physician Component) Total RVU = Conversion Factor * (_____) Work: (Work RVU x Work GPCI)+ CF * PE: (PE RVU x PE GPCI) + PLI: (PLI RVU x PLI GPCI) + CF * [(Work RVU * Work GPCI) + (PE RVU * PE GPCI) + (PLI RVU * PLI GPCI)]

  28. Technical Component MPFS (RVU PE *GPCI(PE) + RVU PLI *GPCI(PLI)) * CF HOPPS (APC) Payment Rate * Wage Index (Regionally Calculated like the GPCI)

  29. How did we arrive at these calculations?

  30. “Lawmakers See Red Over Meat Packaging” “…warn consumers to discard any product with an unpleasant odor, slime, or a bulging package.” - USA Today, 10/31/2007 Pretty Good Advice!!!

  31. MPFS RVU CPT WORK PE PLI Global Billing Professional Component “Attempt to devise the best payment system” Technical Component PAYMENT RATE HOPPS APC

  32. Physician Work Time to perform service Technical skill and effort Mental effort and judgment Psychological stress of iatrogenesis Currently Based on: ACR Socioeconomic Supplemental Survey Data Historically Based on: Harvard RBRVS study 1992 RVS Refinement Process AMA/Specialty Society RVS Update Process

  33. Physician Expense What it costs the “Practice” to run: Rent, Wages, Equip. / Supplies Practice Expense Advisory Committee (PEAC) ACR Socioeconomic Monitoring System Supplemental Survey Data Clinical Practice Expert Panels (MD’s) • Data for constructing cost estimates • In/Direct cost elements for a service • Estimates extended to related codes in CPT family CPEP Technical Expert Group • Monitor data collection process AMA Socioeconomic Monitoring System Data Common service provided only by X (Avg. Medicare 1991 payment $100), the percentage of PE cost for the given specialty X (Y%), multiply that number by the $100 cost and you get Y (Initial Dollar) RVU’s.

  34. Equipment Utilization and Interest Rate(Technical Component (Included in Physician Expense RVU) ) [1/(minutes per year * 50% usage)) * Price * ((11% interest rate/1) - (1/(1+ 11% interest rate) * life of equipment)) + 5% maintenance] Courtesy of Pam Kassing

  35. Physician Liability Insurance Initially: Omnibus Budget Reconciliation Act 1989 Now.. • Calc. average professional liability premium • Calc. risk factor based on specialty • Mult. % of service (CPT based) by risk factor • Mult. By Work RVU • Rescale for budget neutrality ( x Fudge Factor)

  36. GPCI “Gypsie”Geographic practice costindexes AMA SMS 1987 survey Must be updated Q 3 years Changes phased in over a two year period Cost of living: 1990 census college grads, 2000 professional organizations, updates since…. Inputs to medical practice varied by geographic locale Premiums for policy 1 mil/ 3 mil

  37. Conversion Factor Updated yearly based on BBA 1997 CFx = CFx-1 * MEIx * UAFx * LCx * BNx MEI: Medical Economic Index Measures average price change for medical goods/services with respect to inflation UAF: Update Adjustment Factor Comparison of actual and target Medicare expenditure. Designed to prevent unsustainable increases in Medicare expenditures. LC: Legislation Change BN: Budget Neutrality

  38. So, how does it all add up?

  39. Example: CT Chest I+712602008 [(Work RVU x Work GPCI) + (PE RVU x PE GPCI) + (PLI RVU x PLI x GPCI)] x CF Work ((1.24) x Budget Neutrality Adjuster (0.8816)) , PE(0.44), PLI (0.05), CF(34.0682) RI = (((1.24 x 1.045 x 0.8816) + ((0.44 x 0.991)) + ((0.05 x 0.895)) x (34.0682)) = $ 55.36 Ca (SF) = (((1.24 x 1.060 x 0.8816)) + ((0.44 x 1.546)) + ((0.05 x 0.640)) x (34.0682)) = $ 63.71

  40. Technical Component MPFS (RVU PE *GPCI(PE) + RVU PLI *GPCI(PLI)) * CF RI: (7.48 (0.991) + 0.37(0.895)) * 34.0682 * = 263.79 CA(SF): (7.48 (1.546) + 0.37(0.640)) * 34.0682 * = 402.00 HOPPS (APC 0283): Payment Rate * Wage Index(2006) RI: 289.71 * 1.0954=317.35 CA(SF): 289.71 * 1.4974=433.81

  41. MPFS RVU CPT WORK PE PLI Global Billing Professional Component Technical Component PAYMENT RATE HOPPS APC

  42. OK, now I understand… But what is the big picture?

  43. Adapted from Woody, I. O. JACR 2005; 2(2):139-150

  44. Courtesy of CMS and H. Forman, MD

  45. Courtesy of CMS and H. Forman, MD

  46. What can we do… Well, all politics is local . . .

  47. MAC

  48. All politics is local….. >90 % Of Coverage And Payment Decisions Occur At The Local Level Each MAC is required by CMS to have a physician Contractor Medical Director (CMD), who must follow the Coverage Issues Manual, Program Memoranda and other transmittals from CMS defining the CMS national policy for Medicare reimbursement ACR involvement helps prevent the spread of reimbursement policy damaging to radiology between contractors CMS gives authority to the local contractors to determine under what conditions a service is considered medically necessary and claims may be denied if not appropriate. In most states the CMD has the ultimate authority to determine medical necessity Adapted from John Patti, MD

  49. ACR

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